Divx's Death Pleases Opponents

Published 4:00 am, Friday, June 18, 1999

The death of the Divx video disc was mourned by its fans yesterday, but it put smiles on the faces of the die-hard techies who fought it.

Divx, short for Digital Video Express, was touted by its creator, Circuit City, as a way to rent movies without having to return them to the store after viewing. But videophiles feared that it could supplant what they saw as a superior format, DVD, and that it carried "Big Brother" implications of corporations spying on what movies people watched, and when.

"Ding dong, Divx is dead," said a gleeful John Giberson, a Texas real estate agent who ran the www.bandivx.com Web site. "I'm happy that everybody that was unhappy with the format spoke up and let the companies know where they stood on it. I think they made their point."

Divx discs look just like digital video discs and CDs. Like their digital counterparts, they offer superior quality to videotapes. Unlike DVDs, which list for $30 to $35 and are offered for sale, Divx worked on something closer to a pay-per-view model: People could buy Divx discs for $4.50, and then watch the disc any time they chose.

Once they started watching, though, they only had 48 hours in which they could watch the movie as often as they wanted until digital codes made it "expire." After that, they could throw the disc away, or pay to "recharge" it for two more days, or for life. All activities were handled by the Divx player dialing in to a billing center over phone lines. That sparked privacy concerns from people who did not like the idea of their TV making a midnight call to report their viewing habits.

A Divx machine can play ordinary DVDs, but a regular DVD player can't play Divx discs.

Divx proved popular with some consumers who were sick of having to return their videotapes.

"I'm bitter. I thought it was a great product, and a great concept," said Gregg Stauffer, 43, of San Francisco, the office manager for a doctor. "Now I have to go stand in these lines again at Blockbuster. And then I'll have to give it back in a week."

Stauffer, who had bought more than 100 Divx discs, had even posted a Web site defending the product, but he quickly found himself flamed by Divx haters.

"It has to be one of the few consumer products that was destroyed before consumers had a chance to say whether they liked it or not," he said.

Circuit City, the consumer electronics giant that developed and pushed Divx along with its partner, a Los Angeles entertainment law firm, launched Divx only one year ago. But at that time, said Van Baker, director of consumer research for Dataquest, consumers could not rent movies on DVD, and movie studios were dragging their feet on releasing their films on DVD.

If that scenario had remained in place, Baker said, then Divx might have sparked a format war reminiscent of the 1970s contest between Sony Corp.'s Betamax and VHS.

Instead, the backers of DVD regrouped, got the studios on board and put DVDs into video rental stores.

And in the process, Divx faced new hurdles. It could not persuade all of Hollywood's studios to release their movies in the Divx format, and, Baker said, "The fact that it came out of Circuit City was a problem, as other retailers were very reluctant to support a model that would help a competitor."

Plus, Divx faced a vocal minority of technology magazines and so- called "early adopters" like Giberson.

"My two main beefs about Divx," Giberson said, "were No. 1, ownership. When you go to the store, you purchase a DVD, you own the disc and the rights to watch it wherever and whenever you want to. With Divx, you could only watch it in a certain time period.

"The other issue was privacy," he added. "No one really has the right to know what movies you watch, when you watch them, or how often you watch them. Why should anyone have access to that info?"

Circuit City said it will take a $114 million charge to eliminate the Divx division. It will give Divx customers a $100 rebate for their machines (they cost about $100 more than regular DVD players), and it is unloading the discs for $1.99 each.

At that price, even arch-rival Giberson bought one.

"I actually stepped into a Circuit City store for the first time in 18 months and bought a souvenir," he said. "I'm going to frame it, with a page from my Web site and the press release (announcing the demise of Divx)."